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Global Philanthropic Landscape

More individuals than ever before are interested in using their financial resources to “do good” and affect positive change in their local communities and around the world. To this end, many are joining the upward trend of establishing their own philanthropic family foundations, donor-advised charitable funds, or other donation vehicles, in an effort to become increasingly engaged in the giving process and have more of a say in how their contributions are being utilized.

Notwithstanding the uncertain global financial situation currently unfolding, there are still more wealthy individuals than ever before around the world, which is a good indicator for the rise of philanthropy. According to Capgemini's 2008 World Wealth Report, more than 10 million people worldwide hold $1MM+ in assets, which represents a 6% year-over-year gain from 2006.

Americans alone have made nearly $300BB in philanthropic donations for the last several years, with donors becoming increasingly interested in knowing exactly how their money is spent and making sure there are measurable and tangible results from their contributions. The recent up tick in interest in microlending and other direct-to-recipient giving is just one example of how philanthropists are now looking to make demonstrable changes, especially in the lives of individuals. One indicator of this trend is the growth in popularity of charitable tourism, the demand for which has grown 15% over the past two years (Artisans of Leisure/Capgemini).

Changes in Traditional Giving

Individual philanthropists and foundations, and the not-for-profit organizations that are their beneficiaries, are particularly vulnerable to the vagaries of the economy and the stock market with changes in wealth occurring rapidly. Given the horrific economic climate around the world, efficient and performance-driven giving is critically necessary now more than ever. Non-profits, NGOs, and other organizations are looking for new types of philanthropic sponsors and partners, as traditional sources of funding begin to dry up. Smaller and smaller contribution amounts are now making a bigger difference, as smart philanthropists utilize the business principles from their professional/private lives to ensure that their donations make the most impact.

Not-for-profit organizations that are heavily dependent upon donations and investment dividends, are finding their operating budgets significantly curtailed. During any period of economic downturn, efficient philanthropy becomes critical. Never has that been truer than during the current crisis. While philanthropies offering social services have seen an increase in donations, according to a Chronicle of Philanthropy spot check of 35 charities, 28 organizations said that giving is flat or down this calendar year, and 10 reported declines of 10 percent or more.

Many organizations are looking for new, sustainable sources of income, as well as ways to maximize their current resources. Especially now, organizations are being forced to do more with less as the number of those in need increases, and donations become progressively harder to come by. This is a time when resourceful philanthropists are in demand, to help organizations not only with funds, but also with work-sharing. Philanthropists willing to lend their expertise will be well-positioned to help determine the future path of their chosen organizations as well as shaping the policy for the non-profit world as a whole.

Foundations and organizations are joining individual donors in the search for impactful giving. The single largest foundation donor in the United States is the Gates Foundation, which disburses approximately $1.5BB a year (nearly as much as the next five major foundations together) focused on solving major issues through investment, partnerships, and leveraging already existing funds.

There's an old adage that donors prefer to give away their money in the same way that they made it – with industrialists preferring to build lasting community structures, and hedge fund managers looking to invest. These investors in philanthropy- investment bankers, private equity gurus, stockbrokers, traders and others - are turning not only their money, but their expertise towards charity. They offer prizes to incentivize research, leverage capital to attack major issues, create think tanks and partnerships and invest intelligently to achieve the maximum return on investment.

 

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